Y Combinator

The dismal performance of Facebook’s initial public offering, after several years in which it was expected to crown the emergence on public markets of social networks, is bound to dampen the mood in Silicon Valley.

Paul Graham, who runs Y Combinator, a start-up incubator, says the effect will be what you might expect – early-stage valuations will suffer. His email to portfolio companies, obtained by Business Insider, contains this warning:

“If you haven’t raised money yet, lower your expectations for fundraising. How much should you lower them? We don’t know yet how hard it will be to raise money or what will happen to valuations for those who do. Which means it’s more important than ever to be flexible about the valuation you expect and the amount you want to raise (which, odd as it may seem, are connected). First talk to investors about whether they want to invest at all, then negotiate price.”

ABOUT THE AUTHORS

John Gapper is an associate editor and the chief business commentator of the FT.
He has worked for the FT since 1987, covering labour relations, banking and the media. He is co-author, with Nicholas Denton, of 'All That Glitters', an account of the collapse of Barings in 1995.

Andrew Hill is an associate editor and the management editor of the FT. He is a former City editor, financial editor, comment and analysis editor, New York bureau chief, foreign news editor and correspondent in Brussels and Milan.

Emma Jacobs is a features writer for the FT, with a particular focus on Business Life. She explores workplace trends, business culture and entrepreneurship and is one of the paper's leading interviewers.

Adam Jones is editor of Business Life, home to the FT's coverage of management, entrepreneurship and working life.

Lucy Kellaway is an Associate Editor and management columnist of the FT. For the past 15 years her weekly Monday column has poked fun at management fads and jargon and celebrated the ups and downs of office life.

Ravi Mattu is the deputy editor of the FT Weekend Magazine and a former editor of Business Life. He writes about management, technology, entrepreneurship andinnovation.

Michael Skapinker is an assistant editor and editor of the FT’s special reports. A former management editor of the FT, his column on Business and Society appears every Thursday.